The Office of General Counsel issued the following informal opinion on
May 29, 2001, representing the position of the New York State Insurance Department.

Re: Ambulance Subscription Plan

Question Presented:

Would the proposed ambulance service subscription plan (the
"Plan") be permissible under the New York Insurance Law?

Conclusion:

The proposed Plan would violate the New York Insurance Law.

Facts:

A network of private ambulance service providers ("the
network") has proposed offering to the public a subscription plan pursuant to which
the participants would pay an annual fee. This fee would be accepted in lieu of the
co-payment or deductible under the participants insurance coverage by any network
member that provides emergency or medically necessary ambulance transportation to the
participant. Participants would be required to verify that they had existing ambulance
service coverage. Under the terms of the subscription agreement, participants would not be
guaranteed that they would receive ambulance services from any network member.

Analysis:

Under N.Y. Ins. Law § 1101(b)(1)(A) (McKinney 2000), the making as
insurer of any insurance contract constitutes the doing of an insurance business in this
State. Section 1101(a)(1) and 1101(a)(2) define the terms "insurance contract"
and "fortuitous event" as follows:

(1) "Insurance contract" means any agreement or other
transaction whereby one party, the "insurer," is obligated to confer benefit of
pecuniary value upon another party, the "insured" or "beneficiary,"
dependent upon the happening of a fortuitous event in which the insured or beneficiary
has, or is expected to have at the time of such happening, a material interest which will
be adversely affected by the happening of such event.

(2) "Fortuitous event" means any occurrence or failure to
occur which is, or is assumed by the parties to be, to a substantial extent beyond the
control of either party.

In the instant case, the benefits to be provided under the
networks program (i.e., ambulance services) would be based upon the happening of a
fortuitous event. The need for ambulance transport is presumably beyond the control of
either the network or the participant. The Department has in the past opined that a
company is not engaged in the business of insurance where it obligates itself to confer a
benefit based upon the happening of a fortuitous event if the charge made for the benefit
covers the cost of rendition of the services. In effect, such an arrangement amounts to
the provision of a discount, and is permissible. However, it cannot be unequivocally
stated whether or not the cost of rendition for the program you propose will be covered by
the insurance payments in each instance. Every participant will no doubt have different
insurance benefits. Because each subscriber will have different insurance coverage, the
"subscription charge" in effect amounts to an insurance premium. The
"benefit of pecuniary value" under this arrangement is the provision of
ambulance services at a reduced rate.

Because the network is not licensed by this Department and is not
specifically exempted from the statutory requirement for licensing, the proposed program
is not permitted under the New York Insurance Law.

I note further that, as mentioned above, the subscription agreement
under the Plan provides that no network member would be contractually obligated to provide
a subscriber with ambulance services when requested. Rather, the subscription provides
that, in the event a subscriber does receive ambulance services from a network member, the
network member will accept the subscribers medical insurance coverage reimbursement
as full payment and will waive any co-payment or deductible. The fact that the subscriber
is not guaranteed ambulance services by the network member does not alter the above
analysis. The lack of a guarantee that the subscriber will actually receive the ambulance
service does render the chance of receiving benefits of the Plan more uncertain. However,
if the benefits are received, the nature of the operation of the Plan still meets the
definition of insurance in that a promised benefit of pecuniary value is conferred in the
event of the occurrence of a fortuitous event.

Finally, there also exists the possibility that the network members,
whose participation in the Plan essentially amounts to the waiving of co-payments, could
be construed as running afoul of N.Y. Penal Law § 176.05 (McKinney 2000). That section
provides as follows:

A fraudulent insurance act is committed by any person who, knowingly
and with intent to defraud presents, causes to be presented, or prepares with knowledge or
belief that it will be presented to or by an insurer, self insurer, or purported insurer,
or purported self insurer, or any agent thereof, any written statement as part of, or in
support of, an application for the issuance of, or the rating of a commercial insurance
policy, or certificate or evidence of self insurance for commercial insurance or
commercial self insurance, or a claim for payment or other benefit pursuant to an
insurance policy or self insurance program for commercial or personal insurance which he
knows to: (i) contain materially false information concerning any fact material thereto;
or (ii) conceal, for the purpose of misleading, information concerning any fact material
thereto.

The waiving by health care service providers of otherwise properly
payable co-payments and deductibles has been viewed by the Department as violative of the
above provision.

In light of the above, the Plan would not comply with the New York
Insurance Law.

For further information, you may contact Supervising Attorney Michael
Campanelli at the New York City Office.